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NEC

December 2008 by Michael Karagosian

NEC is a giant by any standards. It has a market cap of $11.2B. Its stock is down around 50% over the past two years, par with its peers. The company is well diversified, with operations in IT, networks, consumer electronics, and displays. It purchased its DLP Cinema license from IMAX & Digital Projection when these two departed ways.

In the US, NEC sells to the theatre market through Ballantyne of Omaha (aka subsidiary Strong International). Although NEC built a sales office in Burbank to support its digital cinema effort, it defers cinema sales to Ballantyne, giving it rights to North America, South America, and China. In December, NEC granted Ballantyne additional sales rights for Singapore, Malaysia, and Indonesia.

NEC scored badly in sales commitments from DCIP, gaining only 15-20% of Regal’s business. That announcement was made by Ballantyne mid-September, sending its stock down 50%. There could be several reasons for NEC’s poor performance in digital cinema. Among them is NEC’s commitment level to engineering. NEC’s projector design is said to be 1st generation, not reflecting the engineering level one would expect for mass production. Support from NEC’s Burbank office can be notoriously slow, which could put off larger sales. Notably, there doesn’t appear to be a problem with Ballantyne, given the recent granting of additional territories by NEC.

NEC has many resources, including its network and broadcast divisions, giving it the potential to build out additional products and services in the cinema market. But one wonders if NEC is perhaps too big for this market, with digital cinema just a spec on its balance sheet.

Filed Under: Projectors Tagged With: NEC

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